UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE
COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 34-44264 / May 4, 2001

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1389 / May 4, 2001

ADMINISTRATIVE PROCEEDING
Files No. 3-9863 and 3-10210

In the Matter of

Barry C. Scutilo, CPAMark F. Jensen, CPA, and

R. Gordon Jones, CPAMark F. Jensen, CPA

Respondents.

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OPINION AND ORDER AGAINST MARK F. JENSENPURSUANT TO RULE 102(e)OF THE COMMISSION'SRULES OF PRACTICE

I.

This Opinion and Order Against Mark F. Jensen Pursuant to Rule 102(e) of the Commission's Rules of Practice is being issued with respect to two separate proceedings now pending against Mark F. Jensen ("Jensen") under Rule 102(e) of the Commission's Rules of Practice.1

In connection with two public administrative proceedings instituted against him on April 1, 1999 and May 25, 2000, Mark F. Jensen ("Jensen") has submitted an Offer of Settlement that the Commission has determined to accept. Solely for the purpose of these two proceedings, and without admitting or denying the allegations, facts, findings, or conclusions herein, except the jurisdiction of the Commission over him and over the matters set forth herein, which he admits, Jensen has consented to the entry of this Opinion and Order Against Mark F. Jensen Pursuant to Rule 102(e) of the Commission's Rules of Practice.

II.

On the basis of this Order and the Offer submitted by Jensen, the Commission finds that:2

In the Matter of Barry C. Scutillo, CPA, and Mark F. Jensen, CPA

Background

Sky Scientific, Inc. ("Sky") was at all relevant times a California corporation headquartered in Boca Raton, Florida. Sky's common stock has been registered with the Commission pursuant to Section 12(g) of the Securities Exchange Act of 1934 since August 1990. At all relevant times, Sky purported to be in the businesses of mining and processing precious metals and financial services.

Mark F. Jensen is a CPA licensed in Utah. He was a partner with the Salt Lake City, Utah, firm of Jones, Jensen & Company. Jensen was engaged to assist in and act as concurring partner for the fiscal 1994 audit of Sky.

Facts

Jensen's concurring partner review in the audit of Sky's 1994 financial statements was not conducted in accordance with Generally Accepted Auditing Standards ("GAAS") and the financial statements did not comply with Generally Accepted Accounting Principles ("GAAP"). The audit was deficient with respect to: (1) the valuation of certain purported Russian certificates of deposit ("CDs") which comprised Sky's major asset; (2) the valuation of Sky's mineral properties; and (3) evaluating Sky's accounting for its issuances of restricted stock and Form S-8 stock to purported consultants.

Jensen engaged in improper professional conduct in that he recklessly violated applicable professional standards, including the exercise of due professional care.

The improper professional conduct included failure to comply with GAAS in that Jensen: failed to determine that the engagement partner had planned or performed appropriate audit procedures; maintained control over the confirmation request and response process with respect to the CDs obtained sufficient competent evidential matter concerning the validity and valuation of the CDs, the valuation of Sky's mineral properties, and the value of issuances of Sky's restricted stock and Form S-8 stock; obtained sufficient competent evidential matter concerning Sky's stockholders' equity and exercised due professional care in the performance of the audit.

The Russian CDs were listed on the balance sheet as an asset worth $40 million of Sky's total assets of $69.7 million. Among other things, the audit relied on a facsimile confirmation purporting to be from the Russian bank which was sent to the auditors by the agent who had sold the CDs to Sky, and not the Russian bank. Further, the auditors took insufficient steps to determine if the bank had the ability to honor the CDs, whether it complied with Russian banking regulations, and whether the selling agent had the authority to act on behalf of the bank.

Sky claimed that three of its mineral properties were assets worth $29 million. The three properties had been acquired by Sky in exchange for preferred stock (and in one instance preferred stock and promissory notes). Sky valued the properties at the price stated in its contracts to acquire the properties, i.e., the arbitrary value of the preferred stock and notes exchanged for the properties. Sky, although it purported to be in the mining business had virtually no revenues. It had no cash. Sky instead should have recorded the properties at a reliably determinable fair value. GAAP explains that, when the fair value of an asset received for stock may not be reliably determinable, the asset should be stated at "cost" - i.e., "either by the fair value of the consideration given or by the fair value of the property acquired, whichever is the more clearly evident." However, if neither of these fair values can be determined reliably, the assigned value of the asset should be a nominal amount. The audit failed to properly determine the fair value of the properties or the stock and notes exchanged for them.

Finally, Sky had issued approximately 14 million shares of its common stock, both restricted and unrestricted, to compensate consultants and officers. Under GAAP Sky should have recognized an expense equaling the difference between the price paid for the stock and the market price of the stock of between $7.8 and $10.5 million. Sky did not do so and the auditors failed to insist that it do so.

In the Matter of R. Gordon Jones, CPA, and Mark F. Jensen, CPA

Background

Dynamic American Corporation ("Dynamic") was at all relevant times a Utah corporation headquartered in Salt Lake City, Utah. Dynamic's common stock became registered with the Commission pursuant to Section 12(g) of the Exchange Act in March 1972. The Exchange Act registration of Dynamic's shares was revoked on November 1, 1999.

Jensen performed the concurring partner review for the audit of financials of Dynamic's financial statements for the year ending September 30, 1995.

Facts

Jensen engaged in improper professional conduct in that he recklessly violated applicable professional standards in performing the concurring partner review in the audit of Dynamic's financial statements for the fiscal year ended September 30, 1995. The audit was not conducted in accordance with GAAS and the financial statements were not prepared in conformity with GAAP, contrary to the unqualified opinion issued by the principal auditor and concurrence by Jensen.

Dynamic's financial statements for the year ended September 30, 1995, were not prepared in conformity with GAAP in that Dynamic's balance sheet improperly listed as an asset certain Bolivian mining properties which were materially overvalued at $36,600,000, or 91% of Dynamic's total consolidated assets reported.

In fiscal 1995 Dynamic entered into a contract to acquire these properties in exchange for its Class A preferred stock. By the terms of the contract, this preferred stock was to have been converted to restricted common stock and transferred to the owner of the properties, Fernando Pero. However, the Class A preferred stock was not converted until after the 1995 fiscal year-end, and the restricted common stock was never issued to Pero. Thus, Dynamic should not have recorded the properties as an asset in fiscal 1995 or any other period because the conditions of the contract were never satisfied.

Because the common stock referenced above was restricted, its value was significantly less than the value Dynamic wished to record for the Bolivian properties on its balance sheet. Accordingly, after the fiscal 1995 year-end, Dynamic's board of directors authorized issuance of Class B preferred stock as supposed additional payment for its purchase of the properties. Dynamic then used the arbitrary redemption value of this Class B preferred stock to assign a significant value to the properties on its 1995 financial statements, which was an improper accounting treatment under GAAP.

In performing the concurring partner review in the audit of Dynamic's 1995 financial statements, Jensen also did not act in accordance with GAAS in that prior to concurring in the issuance of an unqualified audit report by the principal auditor, he:

1) Failed to determine whether the audit was adequately planned in that the principal auditor had not: (i) obtained an appropriate level of knowledge of Dynamic's business, and (ii) developed appropriate audit programs.

2) Failed to determine whether the principal auditor had obtained sufficient competent evidential matter concerning: (i) the valuation of the Bolivian mineral properties, and (ii) the professional reputation and independence of other auditors that performed audits of the Bolivian properties' financial statements before the properties were acquired by Dynamic.

3) Failed to maintain an attitude of professional skepticism in not noting that the principal auditor had (i) not responded to information suggesting that Dynamic's valuation of the Bolivian properties was inflated and that the acquisition of the properties was improperly recorded as a fiscal 1995 transaction, (ii) failed to question or adequately verify certain representations made by Dynamic's management; and (iii) failed to obtain a letter of representation from the other auditors of the Bolivian properties' financial statements.

4) Failed to note that the principal auditor had not exercised due professional care in the performance of the audit.

5) Failed to note that an improperly worded audit report was issued by the engagement partner with respect to the work performed by other auditors.

6) Failed to determine whether the principal auditor had obtained sufficient competent evidential matter to determine that a proper test had been done of the present value of certain "ore concentrates" valued at approximately $4.3 million.

III.

Based on the foregoing, the Commission finds it appropriate and in the public interest to accept the Offer of Jensen and impose the sanctions consented to therein. Accordingly, IT IS HEREBY ORDERED that, effective immediately,

1. Jensen is denied the privilege of appearing or practicing before the Commission as an accountant.

2. After 3 years from the effective date of this order, Jensen may request that the Commission consider his reinstatement by submitting an application (attention: Office of the Chief Accountant) to resume appearing or practicing before the Commission as:

a) preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such an application must satisfy the Commission that Jensen's work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or

b) an independent accountant. Such an application must satisfy the Commission that: (i) Jensen, or the firm with which he is associated, is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"); (ii) Jensen, or the firm, has received an unqualified report relating to his, or the firm's, most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and (iii) As long as Jensen appears or practices before the Commission as an independent accountant he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.

3. The Commission's review of an application by Jensen to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Jensen's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

By the Commission.

Jonathan G. Katz
Secretary

Footnotes

1 Paragraph 1 of Rule 102(e) provides, in relevant part, that: The Commission may . . . deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission after notice and opportunity for hearing in the matter: . . . (ii) [t]o be lacking in character or integrity or to have engaged in unethical or improper professional conduct; or (iii) [t]o have willfully violated, or willfully aided and abetted the violation of any provision of the Federal securities laws or the rules and regulations thereunder.

2 The findings herein are made pursuant to Jensen's offer of settlement and are not binding on any other person or entity named as a respondent in this or any other proceedings.